Focusing on 8-inch Foundry Services for Small Fabless Firms

SK Hynix has started hiring experienced foundry workers.

SK Hynix has started hiring experienced foundry workers in a move to bolster its foundry business. The company appears to be aiming to provide 8-inch foundry services for small and medium-sized fabless companies.

SK Hynix announced job openings earlier this month for seasoned workers with experience at 8-inch foundry companies for more than five years.

Industry insiders say that SK Hynix has started to bolster its foundry business in line with SK Hynix vice chairman Park Jung-ho's announcement in May that the company would double its foundry production capacity. SK Hynix is hiring employees on its own, not through its foundry subsidiary SK Hynix System IC.

They say that SK Hynix is seeking to fully acquire Key Foundry where it currently has a 49.8% stake. It made an equity investment in the company through a private equity fund, which it jointly established with the Korean Federation of Community Credit Cooperatives in 2020. Key Foundry is a company established in September 2020 by the spun-off foundry division of MagnaChip Semiconductor. Key Foundry is an 8-inch (200 mm) foundry, just like SK Hynix System IC.

SK Hynix System IC’s current production volume is 100,000 sheets of wafer per month. If SK Hynix acquires Key Foundry, its overall production capacity will jump to 180,000 sheets of wafer per month.

An 8-inch foundry process was regarded as an outdated technology only until three to four years ago. Since the late 2000s, semiconductor leaders such as Samsung Electronics and TSMC have used 12-inch (300 mm) wafers to increase output. SK Hynix also uses 12-inch wafers in manufacturing DRAMs and NAND flashes. Although 12-inch wafers help chipmakers improve productivity, their production cost is also high. So they are not suitable for making low value-added semiconductors such as image sensors and telecommunication chips.

The reason 8-inch wafers have begun to draw attention again is due to the growth of the system semiconductor market. Demand for diverse semiconductor designs surged with the advent of the 4th Industrial Revolution. Foundries with 8-inch production lines are suitable for small-volume production of diverse chips. Semiconductors for vehicles that have been in short supply since the end of 2020 are produced through 8-inch processes.

Another point that SK Hynix is focusing on is Korea's fabless market. Korea needs to improve its fabless industry. Only LX Semicon (formerly known as Silicon Works), which is in the process of being separated from LG Group, is a major company recognized in the global fabless market.

TSMC grew into the No. 1 foundry business through shared growth with fabless companies in Taiwan. One such example is MediaTek, a fabless company with the world's largest market share in mobile APs. Taiwan is the second-largest powerhouse in the global fabless market after the United States.

Until now, Korean fabless companies had trouble in finding foundry companies that can produce their chips. As most of the high-tech foundry services are set aside for global fabless companies such as Qualcomm, Nvidia, and AMD, small and medium-sized fabless Korean companies are having hard time finding facilities for prototype production.

If SK Hynix keeps pace with Korea's small and medium fabless companies, it will be able to secure demand in a stable and win-win manner.

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